Mayor Rob Ford has lost his public battle to keep his ally Eugene Jones as CEO of Toronto Community Housing Corporation and described Friday, the day of Mr. Jones’ departure announcement, as “one of the worst days in Toronto’s history.”

TCHC board chair Bud Purves told a news conference that Mr. Jones has been replaced by vice-president Greg Spearn as interim CEO as the result of a “mutual agreement” and a $200,000 settlement. Mr. Jones’s leadership has been under scrutiny over his hiring and firing practices – especially after a report from the city’s ombudsman this week accusing him and other TCHC leaders of running the organization “like their own personal fiefdom.”

“After much deliberation, the board and Gene have mutually decided that a change in leadership will best position TCHC to move forward in implementing this strategic plan,” said Mr. Purves after a closed-door board meeting. And though he characterized Mr. Jones’s departure as a resignation, he would not say whether Mr. Jones was given the option of staying.

Mr. Jones is the fourth TCHC CEO to leave since the organization was formed in 2002 – and the second in three years to depart amidst a scandal. It also comes as Canada’s largest social housing landlord is seeking $2.6-billion from all levels of government to eliminate a repair backlog and fix up aging residential properties over the next decade. The CEO turnover has raised questions about the board’s governance and whether the huge agency should be restructured.

The board’s decision comes as a blow to Mr. Ford, who has spent the past week attempting to rally support for Mr. Jones, and made the departing CEO’s hands-on approach at the TCHC a key part of his re-election campaign.

“This is one of the worst days in Toronto’s history, losing a man of this calibre,” Mayor Ford said Friday during a personal visit to TCHC headquarters to show his support for the embattled CEO. “It’s unbelievable how people can be treated when they’re trying to do better for the poor in this city.”

In advance of Friday’s meeting, the mayor personally called members of the board and held a news conference, publicly urging them to keep Mr. Jones in his job. He also e-mailed and tweeted supporters, asking them to rally at TCHC headquarters in support of Mr. Jones. About a dozen people showed up.

One of those supporters, TCHC resident Cathy Birch, said Mr. Jones “has done so much for residents. He’s the first CEO where residents can actually pick up the phone, call him and say ‘help,’ and he’ll come. It doesn’t matter if it’s 8 o’clock in the morning or 2 o’clock in the morning: He’s there.”

When reached on his cell phone Friday, Mr. Jones – who came to Toronto in 2012 after running the Detroit Housing Commission – said he would not be commenting on the agreement. His lawyer, Soma Ray-Ellis, said in a statement that “Mr. Jones is pleased to state that the parties came to mutually agreeable financial terms last night.”

City of Toronto ombudsman Fiona Crean said this week that there has been a 67 per cent turnover rate amongst staff since Mr. Jones’s arrival – resulting in $1.6-million in severance costs. She accused Mr. Jones and other senior managers of an “abject failure of leadership” for ignoring rules to promote, hire and fire staff seemingly at their own whim.

Deputy Mayor Norm Kelly, speaking at city hall, characterized the six months until the October election as a “stabilization” period for the agency, but suggested the next council will want to consider all options, including a possible breakup of the agency. “It’s a large, awkward, difficult corporation to govern,” he said.

City Manager Joe Pennachetti said city staff will work with TCHC to implement the reforms recommended in the ombudsman’s report, and also release a report next week with recommendations for the May meeting of city council about how to move forward.

Both men said the appointment of a permanent CEO might not come until the next term of council.